In order to obtain credit and establish relationships with material suppliers, many contractors sign boilerplate credit agreements which contain disclaimers and other terms favorable to the supplier. The importance of such boilerplate terms was highlighted in the recent unpublished case, Allen and May Mettler dba Arm Construction v. Gray Lumber Company, No. 30506-6-III (Division 3, Sept. 11, 2012). In Mettler, the Mettler’s construction company, Arm Construction, placed an order by telephone with Gray Lumber for #2 of better grade Douglas Fir 4x4s to be used as load-bearing timbers. While the bill of lading reflected the #2 grade, much of lumber delivered was stamped “standard.” Arm’s foreman did not notice the defect and used the lumber. Within hours, the 4x4s failed and two of Arm’s employees were injured in a fall. The worker’s suits against Arm’s general contractor and Gray Lumber were ultimately settled.
Four years later, Arm filed its own suit against Gray alleging claims arising out of the parties’ written contract. Arm sought damages for lost management time, lost workforce time, L&I penalties and premium increases, insurance deductibles, and legal fees. Gray ultimately moved to dismiss the claims on summary judgment relying on disclaimers and limitations of liability found in the parties’ written credit agreement. The credit agreement disclaimed all express and implied warranties, as well as limited Gray’s potential damages to the “purchase price of the defective goods and materials.” In response, Arm attempted to argue that the credit agreement was a “take it or leave it deal” and that Gray’s president, after the accident, had acknowledged the mistake, agreed to replace the goods, and “make Arm whole”.
Ultimately, both the trial court and the court of appeals rejected Arm’s arguments and held that even if the alleged statements by Gray’s president were true, they did not amount to an unequivocal waiver or modification of the written contract’s terms. The court further noted that consistent with damage limitation in the credit agreement, Gray did in fact replace the defective materials. Gray Lumber prevailed in both courts. The Mettler decision serves as a reminder of that boilerplate disclaimers and damage limitations that may seem unimportant to either party at the time of contract formation can later prove to be invaluable should a claim or incident arise.